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Paul Shakuri

Market Makers. Who are they and why you should know

The age old question many traders and investors ask me is, why do I get into a position during the first hour of trading and usually get crushed? The answer is simple. Market manipulation. But by who? The answer is simple. Good old market makers. First, let’s go over who they are. Market makers are basically the middleman for buyers and sellers. They are employed by the big firms such as Goldman and Morgan Stanley. They are also known as specialists as you will see them referred to on CNBC and Bloomberg. They ensure proper and efficient order flow and create an environment where buyers and sellers have a liquid trading experience. Now they usually don’t earn a commission. They are mostly salaried and ensure that their firms make money as they hold large amounts of stock which they buy and sell each and every day. They make money by …

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The Trend is Your Friend. Or is it?

You’ve read it all before. Follow the trend. It’s your friend. The question is, how accurate is that statement really? In terms of day trading, it’s a double-edged sword. In equities as well as futures, the trend is hard to fight when you have a massive sell off or massive spike in the market. It’s a no-brainer. However on a typical day with average to above average volatility you can expect some swings and reversals. Especially early in the trading session. The beauty is that you don’t need a secret formula or that one magic indicator to figure that out. Think in terms of an airplane. As crazy as that sounds it won’t fly forever. It will come down. The question is when. When I trade futures or options I’m looking for sudden extremes whether they be on the buy side or sell side. In terms of price action, I …

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